So what I do is disable everything without even thinking. Later when something isn't working as expected and it turns out it's because of one of those privacy settings, I start to think about whether or not I really need it.
So effectively, they give me an incentive to summarily reverse their opt-out strategy into an opt-in one. I suppose that's fine with them because most people won't do even that.
However, they should be aware of the fact that this is the second easiest thing to do after leaving everything enabled.
Over time, they may be creating a popular culture of "disable everything" just like they created a culture of ad-blocking (where "they" is the whole advertising industry in this case, not so much Google itself)
I can understand your point about allo more, though of course storing the local history unencrypted also means that it's going to be accessible to interested third parties in one way or another. If they don't keep it at all, it means that it won't be.
I tried to find information about it online, but the official documentation [0] is less than helpful to say the least. I'm guessing when they say "stuff", that's a euphemism for blob, but fuck if I know, maybe they are just trying to be hip in their documentation. After all, it's also business time, in case you didn't know.
Currently downloading the Chromium source code, to see if that's more helpful, but I kind of doubt it...
[0]: https://www.chromium.org/developers/design-documents/sync
The official documentation talks about the folders /chrome/browser/sync/engine, /chrome/browser/sync/syncable and /chrome/browser/sync/protocol.
These folders are missing from the source tree, as you can see here: https://chromium.googlesource.com/chromium/src.git/+/master/...
However, I decided to give the benefit of the doubt and did a few file-searches, in case the files were moved at some point and the documentation was just not updated.
And it seems like that's actually the case. The folder /sync contains all three missing folders (engine, syncable, protocol) and more: https://chromium.googlesource.com/chromium/src.git/+/master/...
http://www.chromium.org/developers/how-tos/run-chromium-with...
A successful experiment may be deserving of a blog post.